past due RMD
Individual is 72 years old and has a TIRA that he has never taken RMD from. How does he go about correcting this situation?
Individual is 72 years old and has a TIRA that he has never taken RMD from. How does he go about correcting this situation?
Permalink Submitted by Jose Morales on Mon, 2014-08-04 16:04
Is there a reasonable excuse for missing the RMDs or did the client simply forget? If there is a reasonable excuse the person should immediately withdraw the missed RMD amounts to show a good faith attempt to correct the mistake (also make sure that this year’s and all future distributions are taken in a timely manner). When the person completes Form 5329 for the years in which a distribution was missed. In Part 8 the RMD amounts that should have been taken and the penalty for not taken them is documented. Complete Lines 50 and 51 in accordance with the instructions on the form, write “RC” and the amount you want waived on the dotted line next to line 52. Calculate the penalty owed as if the waiver was given on line 53 and attach your request for waiver, with an explanation for why the waiver should be given. The IRS will decide whether to waive the penalty or not.
Permalink Submitted by tomd37 on Mon, 2014-08-04 16:21
Just to make sure you understand, do not send any money with the Form 5329. Include any supporting documentation you can to show the IRS that you have taken the RMD (e.g., copy of the RMD check(s) they send you). The IRS will most likely waive the penalty. You will receive a Form 1099-R for 2014 next January or February reflecting this distribution and also any 2014 distribution you may be required to take. Tom D.